This is why Barclays PLC is Exiting Africa

Barclays PLC, the financial entity that has been scaling the financial market in Africa for more than 100 years is planning to exit the African market. The group says that this is part of its wide plan to simplify its operations as well as boost its shareholding returns in all its operations.

Anxiety is now mounting among the employees as well as thousands of customers who have subscribed to the services of the bank as most employees are now scared about their jobs. Due to the widespread speculations on the social media across the world that the bank is closing down operations in Africa, the bank has come out to clearly set the record straight retaliating that it is only selling more than 62 percent of its shares and that Kenya in particular will not be affected.

If at all Barclays Kenya is to be affected in terms of the change in shareholding, what will be at stake? Breaking it down in numbers, Barclays in Kenya has a customer base of 800,000 with deposits amounting to 163 billion shillings. The table below shows an overview of Barclays Bank in Kenya;

Fig 01

The announcement by the management of the bank that it is going to sell its more than 62 percent stake in Africa comes after the bank reported a 2 percent fall in full-year profits. The bank which has its origins in Britain says that in the next two to three years, 62 percent stake in Barclays Africa Group would have been sold as shown the in the pie-chart below;

Fig 02

According to economic analysts and records of the bank, the stake that the bank intends to sell is worth R78bn or 4.83 billion US Dollars at the current market prices though the prices are prone to fluctuations. The analysts have termed the move by Barclays untimely as at the moment, there are no ready buyers who are willing to take up African businesses.

In 2015, the years ending 31^st December, Barclays reported a pretax profit of 5.4 billion pounds slightly below 5.502 billion pounds in profits gotten in the year 2014. This was below the average forecast of 5.772 billion pounds from a consensus of analysts’ forecasts.

See the table below

In the recent months, Barclays Bank Group has made serious cuts across its investment bank and exited several businesses including in Asia in a move that was termed by the management as a way to trim costs, reduce risk and shore up its balance sheet. In a financial report released by the bank, the common equity tier one ratio of the bank was 11.4 percent last year from 10.3 percent in 2014. This ratio is a key measure of a financial strength. The leverage ratio of the bank increased 4.5 percent.

Barclays Bank made a cut in its provisional in the fourth quarter of 1.45 billion pounds for miss-selling loan insurance. This made a total sum set aside for customer redress to 7.42 billion pounds. The decision for Barclays Bank to close shop in Africa saw last month announcing plans to further trim the investment bank, reducing up to 1,200 staff by closing smaller operations in Asia, Brazil, Europe and Russia.

Article by Juma Fred.